The house and senate are set to vote on legislation that could have profound effects on online commerce and the Internet in general. These bills seek to protect the intellectual property rights of US businesses and individuals, but opponents of the bill worry that these bills are too broad, are likely to be ineffective for their intended purposes, and are likely to have important negative unintended consequences. Given the current state of the legislation, for reasons we’ve detailed below, we side with those opposing the legislation.
These controversial bills may be voted on as soon as next month. The Senate version is called the “Protect Intellectual Property Act” (PIPA), and the House version is called the “Stop Online Piracy Act” (SOPA). There is also a new Senate bill offering an alternative to the SOPA/PIPA plan called the “Online Protection and Enforcement of Digital Trade Act” (OPEN).
Legislation Needed to Address Serious Problems
Every year American businesses lose millions of dollars to foreign entities who illegally distribute goods protected by copyrights and trademarks. SOPA and PIPA aim to put a halt to the distribution of these goods over the Internet by requiring intermediaries such as web hosting companies and search engines to stop providing online access to infringing sites. Because these infringing entities are not located in the United States, it is unlikely that the US holders of intellectual property rights will have any practical recourse under current US law. Utilizing international and foreign law is often cost prohibitive for US artists, businesses and entrepreneurs attempting to protect their rights. SOPA attempts to provide a cost-effective solution to this very real problem.
Mechanics of SOPA
Federal Prosecutors and Individual Copyright Holders Could Seek Court Orders
SOPA would allow federal prosecutors and copyright holders to seek court orders against websites that have copyright infringing content. Under SOPA the court orders could prohibit search engines from linking to these sites, ad networks from advertising on the sites, payment processors from processing payments for these sites, and internet service providers from providing access to the sites. (Sections 102 & 103)
Court Orders Acquired in Ex Parte Hearings
The process for federal prosecutors to acquire court orders is slightly different from the process for private copyright holders. But possibly in either case, and explicitly in the case of federal prosecutors, the orders could be obtained in court proceedings without the presence of the defendant. (Sections 102 & 103)
Illegal Streaming Becomes a Felony
SOPA would also make it a felony to stream copyright protected material, punishable by up to five years in prison. The electronic reproduction or distribution of copyright infringing materials is also made a felony. Websites with links to sites with copyright infringing materials may fall within this definition. (Section 201)
Immunity for Intermediaries That Voluntarily Restrict Access to Allegedly Infringing Sites
Intermediaries such as Internet service providers, payment processors, and ad networks that reasonably believe a site is committing theft of intellectual property would be immune from lawsuit for voluntary actions restricting services provided to these sites. (Section 104)
Relief for Parties Victimized by Misrepresentations
Parties who are wrongfully accused of having copyright infringing materials are provided a right to relief, including damages and reasonable attorneys fees. (Section 103 (b)(6))
Who Supports the Bills?
Chair of the House Judiciary Committee, and sponsor of SOPA, Representative Lamar Smith wrote in an article for National Review, “The Stop Online Piracy Act specifically targets websites dedicated to illegal and infringing activity. Often based overseas, these websites are called ‘rogue sites’ because they flout U.S. law and face zero legal consequences for their criminal activity. Rogue sites not only steal America’s products and profits; they steal jobs that rightly belong here at home. This bill cuts off the flow of revenue to rogue sites by preventing criminals from selling and distributing counterfeit products to U.S. consumers.”
SOPA has bipartisan support in the House, and is co-sponsored by 31 Representatives. PIPA also has bipartisan support, and is co-sponsored by 40 Senators, including Senate majority leader Harry Reid.
The AFL-CIO and the Chamber of Commerce support these bills and so do many companies which rely on copyright and trademark protection including: the Motion Picture Association of America, the Recording Industry Association of America, Nike, Viacom, NBC-Universal, Ford, Pfizer, Revlon, and the NBA. The music and video industries have contributed almost two million dollars in campaign contributions to the SOPA co-sponsors.
Why Are People Opposed?
People have serious concerns about the effects of the bill. Many are concerned that the bill will dampen online commerce and innovation, cause the loss of American jobs, violate first amendment rights, and make the Internet less secure. People are also concerned with the methodology Congress utilized in assessing the bills.
Concern that the bill will negatively impact online commerce, innovation, and security
By requiring Internet service providers to make access to websites country-specific (foreign websites blocked in the United States, but not necessarily elsewhere) the inter-connectivity that is essential to the Internet is put in jeopardy. The current domain name system (DNS) would also be jeopardized as these bills would require DNS servers to stop referring IP addresses to infringing sites. In an open letter to Congress 82 Internet architects warned Congress:
“If enacted, either of these bills will create an environment of tremendous fear and uncertainty for technological innovation, and seriously harm the credibility of the United States in its role as a steward of key Internet infrastructure. Regardless of recent amendments to SOPA, both bills will risk fragmenting the Internet’s global domain name system (DNS) and have other capricious technical consequences. In exchange for this, such legislation would engender censorship that will simultaneously be circumvented by deliberate infringers while hampering innocent parties’ right and ability to communicate and express themselves online.”
A recent study also found that a majority of angel investors and venture capitalists would no longer invest in digital content intermediaries (companies like Twitter, Facebook, etc.) if these bills passed.
The video below shows a House hearing on SOPA where Representative Darryl Issa explains how American search engines would lose traffic to foreign browsers under SOPA:
These bills would also put Internet security at risk according to former Homeland Security Assistant Secretary and NSA General Counsel, Stewart Baker. Mr. Baker states that the DNS-altering provisions in SOPA would lead to a less secure internet: “[SOPA] would still do great damage to Internet security, mainly by putting obstacles in the way of DNSSEC, a protocol designed to limit certain kinds of Internet crime. Today, it’s not uncommon for crooks to take over Internet connections in hotels, coffee shops and airports — and then to direct users to fake websites. Users sent to a fake banking site are prompted to enter account and password data, which is used to loot the account. DNSSEC prevents such attacks by giving each website a signed credential that must be shown to the browser by the domain name system server before the connection can be completed.”
Concerns About First Amendment Rights
SOPA would allow for the removal of online speech in an ex parte hearing (in a hearing without the presence of the site owner). This is a restraint on free speech without prior notice. In July, and again in November more than 100 law professors expressed their concerns about these bills. In this letter, the professors wrote:
“The Constitution ‘require[s] a court, before material is completely removed from circulation, … to make a final determination that material is [unlawful] after an adversary hearing.’ The Act fails this Constitutional test. It authorizes courts to take websites ‘out of circulation’ – to make them unreachable by and invisible to Internet users in the United States and abroad — immediately upon application by the Attorney General after an ex parte hearing. No provision is made for any review of a judge’s ex parte determination, let alone for a ‘prompt and final judicial determination, after an adversary proceeding,’ that the website in question contains unlawful material. This falls far short of what the Constitution requires before speech can be eliminated from public circulation.”
Concerns About Congress’ Methodological Approach
Members of Congress have admitted to not understanding the Internet, being bored with the informative hearings, and have not positioned themselves well to understand the issues. Some have raised concerns that Congress needs to reconsider after acquiring a greater understanding of the issues at play.
Representative Chaffetz makes the case that Congress should take its time and consult with “nerds”:
Who Opposes the Bills?
Four senators, including Washington’s Maria Cantwell, who came from the tech industry, have openly opposed the bills. A handful of Representatives including the minority leader Nancy Pelosi have voiced opposition to SOPA.
Many tech companies and online service providers oppose these bills including Google, Yahoo!, Twitter, Facebook, AOL, LinkedIn, Mozilla Corporation, eBay, and Wikimedia Foundation. The ACLU and Human Rights Watch also oppose the bills.
GoDaddy Debacle Illustrative of Importance of Issue
GoDaddy lost almost 100,000 accounts this week due to their support of SOPA. GoDaddy has since issued a statement that it no longer supports SOPA, but that statement appears hollow to some, and may be too late in any case. Reddit.com users have organized a boycott of SOPA/PIPA sponsors, including GoDaddy, and is arranging December 29th as a day of action. Various sources are reporting that GoDaddy has changed its account transfer policies, making it more difficult for their customers to transfer accounts.
These bills are so important to so many in the tech industry that public support or opposition is already affecting companies’ bottom lines.
Why does iVLG oppose SOPA/PIPA?
In short, we oppose these bills because they do more harm than good. We recognize and appreciate that more needs to be done to protect the rights of intellectual property owners, but the damage these bills would do to online security, our first amendment rights, and the expanding and innovative tech industry are not worth the limited protection gained by holders of intellectual property rights. These bills would not stop online piracy, or the trafficking of counterfeit goods. Instead, these bills would contribute to the migration of US tech businesses overseas, limit capital to support an innovative industry key to American economic growth, and potentially infringe the Constitutional rights of Americans by removing their websites from commerce without prior notification and a proper adversarial hearing.
OPEN is an Acceptable Alternative
OPEN places enforcement with the United States International Trade Commission (the ITC) rather than the United States Justice Department, and seeks to stop the transfer of money, rather than Internet traffic. The United States International Trade Commission already protects the rights of US Patent holders and has broad investigative powers on matters of trade. The Senators and Representatives sponsoring OPEN have created a website for the bill, and explain on that site that “The ITC’s process and work is highly regarded as independent and free from political influence and the department already has a well recognized expertise in intellectual property and trade law that could be expanded to the import of digital goods.” Under OPEN victims of infringing websites would petition the ITC to launch an investigation. Complex matters could require lengthy periods of investigation, but obvious infringements would be addressed in a matter of days. According to the bill’s sponsors OPEN would create “a transparent and adversarial system in which all parties—including interested parties concerned with issues such as free speech—would have a chance to be heard.” If a site is found to be primarily and willfully infringing on US intellectual property rights, the ITC would issue a cease and desist order that would prohibit payment processors and advertising networks from doing business with the infringing sites.
OPEN, in its current form, is not an ideal solution for artists and small businesses seeking to protect their rights. For one, the matters would be litigated in Washington DC, and the complainants would have to meet substantial evidentiary hurdles that may be cost-prohibitve for many potential complainants. And the ITC like many bureaucracies could eliminate many of the bills’ potential benefits through inefficiency. But unlike SOPA and PIPA, it is easy to see how OPEN may be altered to provide meaningful relief for all victims of digital trade theft. The OPEN sponsors have taken the unusual step of seeking public comment online. You can go to http://keepthewebopen.com/ and use the interactive application to submit your suggestions.
The Senate has a cloture vote on PIPA scheduled for January 24th. An affirmative cloture vote, which requires a two-thirds majority, would prevent filibusters and fast track a final vote on the matter. The House will continue mark up of SOPA, and consideration of more than 50 amendments to SOPA when it returns from its holiday recess.
iVLG will continue the discussion regarding SOPA when new developments arise. We appreciate your thoughtful comments regarding SOPA, the future of online piracy and counterfeiting, and how Congress can improve its methodology for responding to important business and technology issues.